Why Gemvara's founder fired himself

Sunday

Mar 17, 2013 at 8:00 AM

By Peter S. Cohan WALL & MAIN

Matt Lauzon grew up as a blue-collar kid in Biddeford, Maine. Now he's chairman of Gemvara, a Boston-based e-provider of customized jewelry.

With a compelling vision and great people skills, at 28, he's built a team that's helped Gemvara become "the biggest jewelry store in New England." In late 2012, he kicked himself upstairs, and in recent weeks has been traveling around the country contemplating his next move.

As Mr. Lauzon explained in a Feb. 26 interview, "I grew up in Biddeford and had a paper route as a kid. My dad was a mailman and my mom was a receptionist. When I first got to Babson College, I asked 'What is VC? What is a CEO?' And I was amazed to see new BMWs and Mercedes in the parking lots." VC is venture capital.

Full disclosure, I teach at Babson.

Mr. Lauzon was not a great student, but he was inspired by being around other entrepreneurs. He ended up starting Paragon Lake in 2006 with a Babson classmate, Jason Reuben, that let consumers customize jewelry on the fly at home and buy it at a local store.

Mr. Lauzon thought jewelry was a big market ripe for disruption.

As he explained, "Buying jewelry is one of the most meaningful purchases in your life, combined with a big price tag. It's a $60 billion market in the U.S. — $250 billion worldwide. And it has not changed much in centuries. We thought consumers would want to customize jewelry to celebrate the moment."

After presenting the idea at a business plan competition, Mr. Lauzon met Highland Capital Partners' Bob Davis (who sold Lycos to Terra Networks in May 2000 for $12.5 billion). Mr. Davis has been an essential mentor for Mr. Lauzon ever since, helping him raise $500,000 in seed capital in 2010.

By February 2013, the company had raised a total of $52 million in venture funding from Canaan Partners, Balderton Capital and Norwest Venture Partner.

But Mr. Davis' help did not end there. He also worked with Mr. Lauzon to change the business model. While Paragon Lake was a business-to-business jewelry concept, Gemvara was a "direct-to-consumer" model that would "provide maximum control over pricing, eliminate inventory liability, and maximize customer satisfaction."

In June 2010, Gemvara's revenue "crossed the six figure mark, with an average order value of $1,000." Gemvara now has 100 employees, including executives that Mr. Lauzon hired from Tiffany and Swarwoski.

One little flaw in this jewel of a startup story was Mr. Lauzon. He was growing uncomfortable in the requirements of the startup CEO role. And as he told the Boston Globe, "it was always my plan to step aside when the company needed me to."

In 2009, Deb Besemer took over as CEO, but after a year Mr. Lauzon stepped back in. But Mr. Lauzon was getting in over his head, and Mr. Davis introduced him to Janet Holian who had been responsible for leading the growth of another Highland Capital startup — VistaPrint.

She joined Gemvara in 2011 as a part-time chief operating officer, and Mr. Lauzon started delegating more and more of his work to her. As he explained, "Bob (Mr. Davis) introduced me to Janet. She started working 10 hours a week, then went to 35, then full-time. She had tons of experience, had been extremely successful, and we had the same values."

Mr. Lauzon concluded that Holian's strengths made Gemvara a better company. As he said, "I couldn't be happier. Where I have vision and can decide where to place the bets, she brings operational excellence. She was chief marketing officer of VistaPrint, responsible for its growth from $1 million to $1 billion in sales. She knows how to scale a business — I don't have that experience."

Mr. Lauzon wants to dispel the myth that Boston is no place for consumer Internet startups. He believes that despite the absence of publicly traded consumer Internet companies, the Harvard/MIT startup common provides access to talent, capital and a network of mentors, without which he could not have built Gemvara to its current level.

Mr. Lauzon got engaged in November, and has spent the last several weeks traveling to New York, Silicon Valley and Las Vegas thinking about his next career move. He sees "pros and cons everywhere" when it comes to different startup commons.

Silicon Valley is teaming with startup activity — with coffee-shop talk of building Twitter and Pinterest — but given real estate and salary costs, it looks to Mr. Lauzon as "way too expensive" a place to start a company. And he is very impressed with Zappos founder Tony Hsieh's efforts to build a startup ecosystem in Las Vegas, although Mr. Lauzon notes, "There aren't a lot of engineers there."

Mr. Lauzon may not have been a great student, but he has learned an important lesson that all entrepreneurs should heed: Know what you're good at, and hire people who do well what you can't.

A little intellectual humility can go a long way.

Peter Cohan of Marlboro heads a management consulting and venture capital firm, and teaches business strategy at Babson College. His email address is peter@petercohan.com.